NEW YORK, June 2, 2026, 06:03 EDT
- Credo ended Monday off 4.1% at $226.10 and slid again after posting results.
- The company topped quarterly forecasts and its outlook came in above consensus, but the market homed in on margins and lofty expectations.
- Management said optical products are expected to play a larger role in fiscal 2027.
Credo Technology Group shares fell ahead of Tuesday’s open. The AI-connectivity company beat quarterly estimates but still left investors unhappy as the chip stock rally cooled.
The stock ended Monday at $226.10, off 4.1%. After earnings, it fell further. Market Chameleon data had the shares at $199.55 in after-hours, a drop of 11.7%. Barron’s said the stock was down again early Tuesday, after tumbling harder right after the numbers came out.
Credo is in the spotlight now as analysts look for any signs of weakness in AI infrastructure names. Even solid results can fall flat if guidance or margins raise questions. Wall Street futures slipped after new highs, with investors watching AI spending and the big networking stocks.
Credo reported fourth-quarter revenue up 157% from last year at $437.0 million. GAAP gross margin came in at 68.2%. On a non-GAAP basis, gross margin was 68.3%. Adjusted diluted earnings reached $1.16 a share.
Results beat Wall Street estimates. Analysts polled by Investing.com were looking for $431.79 million in revenue with earnings of $1.02 per share.
Still, the outlook for next quarter missed the higher expectations after the stock’s recent gains. Credo sees fiscal first-quarter revenue between $465 million and $475 million, with non-GAAP gross margin in a range of 67% to 69%.
Credo CEO Bill Brennan called fiscal 2026 “another defining year,” saying annual revenue jumped to $1.3 billion, over three times last year, and non-GAAP net income climbed more than five times to $662 million. Business Wire
The company makes high-speed connectivity gear for data centers. Its active electrical cables (AECs) are copper with electronics built in. These cables push data between servers and network equipment at higher speeds and with lower power use than some older products.
Brennan and CFO Dan Fleming told investors to watch the upcoming optical ramp. Credo is guiding for over $600 million in fiscal 2027 revenue from ZeroFlap Optics, its silicon photonics photonic integrated circuits that use light to send data, and optical digital signal processors that manage and clean those signals. Management said each segment should top $100 million.
Credo is seeing new customer activity from the “rapid shift to AI workloads,” Fleming said. The company is guiding for mid-single-digit sequential growth in the first half of fiscal 2027 and an inflection in the back half. Investing.com
Mizuho’s Vijay Rakesh bumped his Credo price target to $260, up from $220, while repeating an Outperform call. He pointed to steady agentic AI demand across CPUs, TipRanks/TheFly reported. Jefferies’ Blayne Curtis upped his target to $270 from $225, calling the AEC story “far from over” and saying optics should take the lead next year, according to Intellectia. TipRanks
Marvell Technology jumped in premarket trading as Nvidia CEO Jensen Huang singled out the company’s part in AI data center networking. Broadcom also saw buyers coming in among AI chipmakers. Both companies are in the running for a share of the AI infrastructure market, where faster hardware is key.
Still, risks are there. Credo continues to see three to four customers driving over 10% of revenue for the next few quarters, showing continued concentration. Fleming told analysts guidance is set assuming today’s tariff landscape, which he called “fluid,” and also pointed to tight supply chains. If the optical ramp slows, margins slip, or AI infrastructure spending stalls, defending the stock’s valuation could get tougher. Investing.com
